TaxTMI 
TaxTMI 
2023 (3) TMI 348
X X X X Extracts X X X X
X X X X Extracts X X X X
....e in relation to income which does not form part of the total income under the Act. The ld. AO has not brought on record dissatisfaction about the reasonableness of indirect expenses disallowed by the appellant in the return of income u/s 14A of the Act. 2. Without prejudice to the Ground No. 1, the ld. CIT(A) has erred in law and on facts in not reducing the amount of strategic investments from the average value of investments while calculating disallowance under Rule 8D(2)(iii) of the Rules. [Amount of disallowance of expenses - Rs.25,59,498/-] 3. The ld. CIT(A) has erred in law in confirming disallowance of the claim of additional depreciation of Rs. 15,64,711/- to the extent of 50% in respect of plant & machineries acquired and installed in immediately preceding financial year 2012-13 for less than 180 days. 4. The ld. CIT(A) has erred in law and on facts in holding that subsidy received from the Government of Maharashtra under Package Scheme of Incentive, 2007 to be reduced from the actual cost of asset applying explanation 10 to section 43(1) of the Act and depreciation to that extent should be disallowed. [Amount of disallowance of depreciation - Rs. 9,82,175/-] 5. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... account of amortization of leasehold premium paid. 6. Being aggrieved by the decision of the ld. CIT(A), the appellant is in appeal before us in the present appeal. 7. Ground of appeal no.1 was not pressed during the course of hearing of appeal, same stands dismissed as not pressed 8. Ground of appeal no.2 challenges the methodology of computation of disallowance u/s 14A r.w. Rule 8D(2)(iii). We find merit in the contention the appellant that for the purpose of computation of amount of disallowance under Rule 8D(2)(iii), the value of such investments which yielded exempt income alone has to be considered in the light of the decision of the Hon'ble Delhi High Court in the case of in the case of Joint Investments Pvt. Ltd. vs. CIT, 374 ITR 694 (Delhi), the decisions of Hon'ble Madras High Court in the cases of ACB India Ltd. Vs. Assistant Commissioner of Income Tax, Marg Ltd. Vs. CIT, 318 CTR (Mad.) 148 and CIT Vs. Shriram Ownership Trust 318 CTR (Mad.) 233 and also by the Hon'ble Karnataka High Court in the case of Pragathi Krishna Gramin Bank Vs. Jt.CIT, 95 Taxman.com 41 (Kar.). Therefore, we remand the issue of computation of disallowance under Rule 8D(2)(iii) to the file of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of Explanation 10 to section 43(1) of the Act. Therefore, the issue that arises for our consideration in the present appeal is whether the amount of subsidy received from the Government of Maharashtra shall go to reduce the actual costs of assets u/s 43(1) for the purpose of allowing the depreciation u/s 32 of Act. No doubt, the subsidy was granted in terms of the certain percentage of fixed assets to be disbursed in the form of refund of octroi, electricity duty exemption, entry tax refund, VAT etc. over a period of 8 years. Then the next question, that arises for consideration in such circumstances is that, can be it said that subsidy is granted to meet the cost of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon'ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon'ble Supreme Court held as under :- "Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the facts of the present case, the question of applicability of Proviso does not arise. In the light of the above, we hold that the amount of subsidy is not to be deducted from the actual cost u/s 43(1) for the purpose of calculation of depreciation and the provisions to Explanation 10 to section 43(1) have no application to the facts of the present case. We are forfeited in taking this view by the decision of the Hon'ble Bombay High Court in the case of Welspun Steel Ltd. cited supra. This decision being that of Jurisdictional High Court is binding on us. Therefore, it is not necessary for us to deal with the decision of the Hon'ble Delhi High Court in the case of Steel Authority of India Ltd. (supra) and the Hon'ble Karnataka High Court in the case of Shree Renuka Sugars Ltd. (supra) relied upon by the ld. CIT-DR. Therefore, we do not find any merit in the ground of appeal no.2 and 3 filed by the Revenue. Accordingly, ground of appeal no.2 and 3 stands dismissed. 13. The Revenue vide his ground of appeal no.4 seeks finding from the Tribunal that the amount of capital subsidy received should be held as "revenue in nature". At the outset, we find that this ground of appeal no.4 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rent @ Rs.1 per sq.mtr (i.e. Rs.1,52,981/-) to GPCL. The appellant also claimed amortization of expenses of Rs.26,33,339/- on leasehold land taken for windmill & solar project based on the tenure of lease agreement. The Assessing Officer was of the opinion that amortization of lease premium cannot be allowed as "revenue expenditure", as it is of enduring nature. Even on appeal before the ld. CIT(A), the same was confirmed. 13. Being aggrieved, the appellant is in appeal before us in the present ground of appeal no.5. 14. This issue is no longer res integra as it is settled by the decision of the Hon'ble Supreme court in the case of Aditya Minerals Pvt. Ltd. vs. CIT (236 ITR 39)(SC), wherein, the Hon'ble Apex Court held that lease rent paid for acquiring mining rights is capital in nature and cannot be allowed as a deduction. The relevant paragraph of the said judgment of the Hon'ble Apex Court (supra) is as under :- "4. We find that there is a material difference in the facts of the case of Pingle Industries Ltd. (supra) and the effects of the case of Gotan Lime Syndicate (supra). As the judgment in Gotan Lime Syndicate's case (supra), relied upon by the assessee, clearly s....